Financial Statement Analysis

All the techniques used to show important relationships among amounts in financial statements.

Generally begins with the calculation of a set of financial ratios designed to reveal the relative strengths and weakness of a company as compared with other companies in the same industry, and to show whether its financial position has been improving or deteriorating over time.

In analyzing a small firm’s financial position, ratio analysis is a useful starting point. However, the analyst must also:

• examine the quality of the financial data,
• ensure that firm is sufficiently diversified to withstand shifts in customers’ buying habits, and
• determine whether the firm has a plan for succession of its management.

• Benchmarking
• Objectives of Financial Statement Analysis
• Ratio Analysis
• Sources of Information for Financial Statement Analysis
• Standards for Financial Statement Analysis
• Trend Analysis
• Vertical Analysis